For-profit health options fraught with peril

Apr 19, 2012

Parkland Institute

The Alberta election has just hit the halfway point, and health care has again become a lightning rod. The rival parties are facing off on reform, promising changes running the gamut from more privatization to more public care.

Parties on the right are proposing privatization as a solution to wait-time problems and cost challenges; using public dollars to buy surgeries at for-profit clinics. This is not a new debate in Alberta.

Conservatives across the spectrum are narrowly framing public health care as "publicly-funded" - as the Progressive Conservatives' Alison Redford did in last week's television debate.

The PCs have been clear, for example, on their policy of expanding care for seniors through private, for-profit designated assisted living facilities instead of publicly built, publicly delivered long term care. It appears that with regard to surgeries, this approach may have run its course for the Redford government and Alberta Health Services given the cancellation of the contract with Calgary's now-bankrupt Health Resources Centre and the stated intention to repatriate other contracts because of their costs.

For her part, the Wildrose's Danielle Smith summed up her party's "publicly-funded" distinction when she said: "As long as the needed service is publicly paid for and done safely, it shouldn't make a difference whether an operating room is run by a public hospital or private surgical centre."

But it does make a difference: delivery matters for both cost and quality of health care. A case study of for-profit surgery focusing on Health Resources Centre illustrates the cost, quality, access and other implications of expanding this form of provision. Data from Alberta Health Services shows that on a per-surgery basis the privately owned clinic cost more for the hip, knee and foot and ankle surgeries it conducted. The cost difference is partially accounted for in the profit, which is budgeted at 10 per cent. In short, private surgery costs more.

The Health Resources Centre case is an illustration of the costs and risks of for-profit delivery but it is certainly not the only example. The higher administrative and other costs of for-profit health care have been well documented in international studies published in peer reviewed medical journals in the United States, Britain and Canada. These same studies have also shown clearly that quality and safety are also compromised by the profit-motive, including a higher chance of dying after surgery.

From the outset, the Alberta government admitted private surgery would cost more, but was willing to accommodate corporate profit as an acceptable cost for addressing wait lists. The government stated that "this benefit outweighs any additional cost of contracting the procedures."

And did the for-profit surgery deliver on lower wait times? The answer again is no.

Heath Resources Centre was part of a $20-million publicly funded wait-list reduction pilot project, the Alberta Hip and Knee Replacement Project. The pilot also included public/ not-for-profit providers. That trial was able to reduce overall wait times from family doctor through to surgery by 90 per cent (from 19 months to approximately 11 weeks). However, these achievements were despite, not because of, the for-profit surgery, and, of course, that surgery went bankrupt while the public partners are still successfully operational and continuing to reduce waits.

In less than two years, the pilot was able to test and evaluate a new and innovative care path for hip-and knee-replacement patients. The trial illustrated that with improved management practices and collaboration and co-operation across the delivery path, costs can be reduced, wait times can be decreased and benefits to patients enhanced within the public, not-for-profit system.

Too many recent health reform initiatives have neglected the innovative potential of the public system. There are numerous examples from across Canada of pioneering public sector solutions to wait times. Solutions such as this employ the same "focus" used by the private surgeries yet reduce administrative, management and monitoring costs and eliminate the extraction of profits by shareholders. Indeed, a publicly financed and delivered specialized clinic for orthopedic procedures opened in Edmonton in 2012.

As Albertans head to the polls, it behooves them to take note that it matters who delivers health services. Voters should be asking the question: if it is our money, our nurses and doctors, and we pay for the facility, why on earth do we need the private investors? Why expose our medically necessary health services to the vagaries of the market place? For-profit incursions into the health care system are risky, costly and lack the accountability Canadians expect, demand and deserve.

Parkland Institute is an Alberta-wide, non-partisan research centre situated within the Faculty of Arts at the University of Alberta. Parkland Institute studies economic, social, cultural, and political issues facing Albertans and Canadians, using the perspective of political economy. more »